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Website affiliate agreement: How-to guide

The internet has changed how companies promote their products and services. A company can successfully introduce its website to new customers at a low cost by establishing an affiliate relationship with an affiliate site (a third-party website). The affiliate will provide a link to the company’s website on its own webpage. The affiliate may sometimes link to the company in emails, electronic newsletters, or e-zines. When prospective customers click the link on the affiliate’s website, they directly connect to the company’s website. This leads to the company getting sales through these referrals, and the affiliates receive compensation.

What is a website affiliate agreement?

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A website affiliate agreement lists the company and affiliate’s terms and responsibilities and holds them in a legally binding relationship. This detailed agreement clearly outlines each party’s duties and service expectations and ensures that the operating procedures are evident from the beginning.

When do you need a website affiliate agreement?

Although website affiliate arrangements can be profitable, they can also create problems for both parties, particularly websites operating in regulated industries or subject to consumer protection laws. An affiliate marketing program can lead to false advertising claims, unfair competition, infringement, and other legal repercussions without careful consideration. Parties need a well-drafted website affiliate program agreement to address these concerns and shield them from liabilities associated with affiliate marketers and linking.

Which terms must be defined in an affiliate program?

Discuss essential contract terms with the other party and include them in your affiliate marketing agreement. Here is a list of some of the terms that cover both the company and the affiliate’s interests:

  • What kind of link will be posted (e.g., text, logo, graphic image)
  • Where and for how long the link will be on the website
  • When fees will accrue (e.g., on payment, on shipment, on registration) and when fees won’t be paid (e.g., fraud, cancellation, duplicates)
  • How fees will be calculated, and the company’s right to review the data for accuracy, including audit or inspection rights
  • Restrictions on posting competitor’s links
  • Amount of editorial control each party will have over the link
  • Provisions addressing downtime of the company website or inoperability of the link
  • How customer data will be collected and shared or how cookies will be used
  • Representations about the content of the company website, particularly about intellectual property ownership and excluded content
  • For commercial links, the company’s right to sell the products and services linked to your website
  • Each party’s obligation to maintain its website and the operability of the link

Comply with laws and regulations

Suppose either website has indecent materials (e.g., content that is obscene, violent, defamatory, or pornographic) or is directed at children. In that case, you should review the laws and regulations governing these sites to ensure you comply.

Also, the Federal Trade Commission (FTC) and other law enforcement agencies periodically monitor the internet and look for manipulative, false, and deceptive paid advertising. Be sure to review all relevant state and federal laws to ensure that your advertisements are protected.

Key elements in website affiliate agreements

Here are the key components of a website affiliate agreement:

Introduction

This section identifies the document as a website affiliate agreement. Add the effective date, details about the parties involved, and, if applicable, what type of organization(s) they are (e.g., individual, corporation, partnership, etc.).

In this agreement, the party that provides the link is called the “company,” and the party that posts the link on their website is called the “affiliate.” Together, they’re referred to as “parties.”

Recitals

In the “whereas” clauses, which are recitals, add all the details related to the agreement and the parties involved. As a whole, the recitals state the parties' intent and ability to enter into the affiliate arrangement. In this section, provide a brief description of the company’s business and the addresses of the affiliate website and the company website.

Purpose

This section explains why the parties are entering the affiliate contract. This section confirms the parties’ agreement that the affiliate will post the company’s link. You can add the following details:

  • The name of the affiliate website page where the link will be placed and a description of where the link will be positioned on that page
  • When the link will be available on the affiliate website (e.g., during a specified period, at the discretion of the affiliate)
  • How the link shouldn’t be used (e.g., can’t be used to mislead visitors or disparage the company)
  • Disclaimers on the affiliate website
  • Types of customers the affiliate can refer

Compensation

In this section, add the details about the compensation the company pays to the affiliate for the services provided. Include the following information:

  • How fees will be determined (e.g., by the number of clicks on the link resulting in sales, registrations, and shipments)
  • Rights to inspect records on which the referral fees are based
  • Types of sales or clicks excluded from the referral fee (e.g., fraudulent clicks, cancellations, returns)
  • Payment schedule
  • Events that’ll cause forfeiture of the referral fee

Term

This section indicates that the agreement will last several months. You can also specify the renewal cycle (monthly, quarterly, or yearly) and whether it will be automatically renewed or not.  

Termination

In this section, specify the reasons that can cause the agreement to be terminated before the end of the term (i.e., before the stated services are completed).

Any party willing to terminate the agreement must provide a written notice to the other party.

This section also explains that after termination, the company must pay for any completed services, and the affiliate must return the company’s intellectual property within a specified time.

Responsibilities

This clause lists each party’s responsibilities under the agreement, such as the number of days the company has to deliver the link to the affiliate, each party’s obligation to comply with the other’s privacy policies, etc.

Confidential information

This section defines how both parties must handle the confidential information; for example,

  • The affiliate can use the information only for purposes intended by the agreement.
  • The affiliate can discuss the information only with approved individuals in the company.

You can also add an expiration date here, after which the affiliate will no longer be obligated to keep the company’s information confidential.

Parties’ representations and warranties

This section helps both parties state that they can enter into the agreement and won’t violate any other contract they’re a part of. This section states that each party having the legal right and ability (or being responsible for obtaining the right or ability) must complete its obligations under the contract. 

This section also allows the company to state that the affiliate website is directed only to visitors in the United States, and the company has the right to sell the products and services promoted by the link.

Intellectual property

In this section, each party promises its property, work, and website domain name(s) don’t infringe on any third party’s intellectual property rights. This section also establishes that the parties don’t obtain ownership rights in each other’s intellectual property because of this agreement.

Company rights

Here, the company agrees to certain additional rights, including,

  • Monitoring the affiliate website
  • Modifying or replacing the link
  • Removing the link from the affiliate website
  • Placing a disclaimer on the affiliate website to clarify that the link doesn’t endorse or sponsor that site
  • Ending the agreement immediately with written notice if the affiliate refuses to modify the affiliate website after the company reasonably requests it

Delivery, format, and posting

In this section, the company will specify the format in which the link will be provided (i.e., permissible types of links, dimensions, languages, colors, and fonts). The company can also mention how the link is delivered to the affiliate.

Competitive links

In this section, the affiliate agrees not to post links belonging to any company’s competitor on the affiliate website during the term of this agreement.

Indemnification

This provision allocates responsibilities between the parties if problems arise in the future and protects each party from the consequences of the other’s negligent or intentional conduct.

Laws affecting electronic commerce

This part explains that each party will solely be responsible for any commercial taxes levied on its site. This may not be necessary if neither party is selling items on their web pages or if a different agreement has been made.

Limitation of liability

This section limits the company and affiliate’s ability to sue each other for lost profits or brand or reputational damage.  

Disclaimers

In this section, both the company and the affiliate can add disclaimers, such as the company mentioning that the products or services the link is promoting may or may not be fit for certain purposes.  

Nature of relationship

This clause explains that the affiliate isn’t an employee, partner, or agent of the company and vice versa. Both the company and the affiliate work as an independent contractor and aren’t bound by any relationship. This is an important distinction for many reasons, including those relating to insurance coverage, legal liability, and taxes.

Amendments

This part indicates that any changes to the agreement are ineffective unless they’re made in writing.

Assignment

This section explains that either party can assign its obligations and interests under the agreement only with the other party's prior written consent.

Successors and assigns

This clause specifies that any rights and obligations held by the parties will be transferred to heirs in the event of death. Similarly, in the case of companies, the rights or obligations will be transferred to the successors in the event of a business transfer.

Force majeure

This section releases a party from the affiliate program if its performance is interrupted by an event beyond its control (e.g., flood, earthquake, etc.). This release is effective only as long as circumstances continue to prevent that party’s completion of its tasks.

No implied waiver

This section clarifies that if one party allows the other to ignore an obligation mentioned in the agreement, it doesn't mean that the first party gives up the right to enforce those or any other obligations in the future.

Notice

In this section, list the mailing addresses of the affiliate partners to which all official or legal correspondence should be delivered.

Governing law

This section allows the parties to choose the applicable law that’ll be used to interpret the document.

Counterparts; electronic signatures

This section clarifies that if the parties sign an agreement from different locations electronically, all of the separate pieces will still be considered as part of the same agreement. This ensures that business can be conducted efficiently without compromising the validity of the agreement as a whole.

Severability

This section protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it won’t undo the entire document. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the agreement enforceable.

Entire agreement

This clause states that when two parties sign a document, they agree that it represents the final agreement on the issues discussed. However, even with this provision, one party can claim that other enforceable promises were made. Nevertheless, having this provision can offer some protection against such claims.

Headings

This part clarifies that the headings at the beginning of each section are for organizing the document only. Interpretation shouldn’t be based on headings.

Frequently asked questions

What information should be added to a website affiliate agreement?

Here's the information you'll need to have handy to complete your website affiliate agreement:

  • Who it's coming from: Determine if a company or individual is sending the affiliate agreement and have the name and contact information ready
  • Who it's going to: Know who this affiliate agreement is going to and have the individual or business name, website details, and contact information ready
  • Subject matter: Be clear about the general subject and terms of the agreement, like commissions and any specific conditions, such as restricted trademark terms
  • Timeframes: Know how long you want the initial term of the agreement to be

What is deep linking in an affiliate website?

Deep linking happens when an affiliate link in the website leads to a page other than the company’s homepage.

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